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What Exactly Is Financial Planning?

 Daniel Cunningham, Associate Director of Wealth Management

               Throughout everyday life, the question often comes up: “So what do you do?” Typically, I respond by stating that I am a “financial planner.” I recognize that with no further explanation of what that exactly means, everyone interprets it slightly differently based on their own knowledge and experiences. Financial planner, fiduciary, financial advisor, investment advisor, stockbroker – there are a number of names for people who provide financial advice to individuals. It can be quite tough to dissect and differentiate, especially when they are so commonly confused and commingled. So how is a financial planner different? What exactly do we do?

               The short answer is -- we do financial planning.

I admit that probably isn’t much help. So, let’s talk about what financial planning is. There are numerous definitions for financial planning, but my personal favorite comes from the Certified Financial Planner (CFP) Board:

Financial Planning is a collaborative process that helps maximize a Client’s potential for meeting life goals through Financial Advice that integrates relevant elements of the Client’s personal and financial circumstances.

A bit of a mouthful, sure, but useful nonetheless. Let’s break it down a bit further to help bring some more clarity to the idea of financial planning.

Collaborative Process – First and foremost, financial planning is a process. It is not one meeting. It is not a document handed over to a client. And it is, by necessity, collaborative. You, as the client, have data, both qualitative and quantitative, including your current situation and what we are trying to accomplish – your goals. We, as the planner, have knowledge and experience in helping people achieve those life goals, financial or otherwise. Financial planning brings the two parties together and we, as a team, work together to get you as close to those goals as possible.

Maximize a client’s potential for meeting life goals – Everyone has different goals for their lives. Typically, first and foremost is planning for retirement or education, but some other common goals we see include the following:

  • Protecting your loved ones in the case of death or disability
  • Starting a family
  • Planning to leave a legacy
  • Buying a first home
  • Buying a vacation home
  • Career change
  • Caring for elderly parents
  • Moving to a different state, or country
  • Traveling
  • Starting a business
  • Buying a business
  • Reducing debt

We start with the goals and work backwards. What needs to be done now in order to achieve those goals in the future?

Integrates relevant elements of the Client’s personal and financial circumstances - The word that stands out to me here is "personal." Financial planning is not just a set of numbers, it is about a person, or a family. When we engage in financial planning the numbers are certainly relevant. We need to know your income, savings, expenses, debts, etc. However, the qualitative rather than the quantitative is what directs the majority of the plan. What drives you as a client? How do you feel about money? What experiences in your life shaped those beliefs? What are your values? How do those values lead into what you want to accomplish in life - your goals? 

Now that we understand the concept of financial planning, or the what, let's talk about the how. What does the actual process entail? 



  1. Understanding the Client’s Personal and Financial Circumstances—The process begins by establishing a quantitative and qualitative picture of who the client is and what they want to achieve financially.
  2. Identifying and Selecting Goals—Using the information identified in step one, the financial planner helps the client identify and select goals.
  3. Analyzing the Client’s Current Course of Action and Potential Alternative Courses of Action—This step establishes whether the client is moving toward their financial goals and if not, identifies alternative recommendations to do so.
  4. Developing the Financial Planning Recommendation(s)—At this point, the financial planner evaluates and selects the recommendations they believe will help meet the client’s goals.
  5. Presenting the Financial Planning Recommendation(s)—Here the financial planner shares the recommendations and the thought process behind them to help the client make an informed decision about whether the recommendations are a good fit.
  6. Implementing the Financial Planning Recommendation(s)—Often the most difficult step, this requires the client to have the desire and discipline to put the plan into action with the support of their financial planner.
  7. Monitoring Progress and Updating—Because financial planning is a process and not a single end-point, the plan is continuously monitored and adjusted as the client’s life evolves.